Everything You Need to Know About Car Rentals and Insurance
You need to make sure that your rental car is covered for damage, theft, and liability. If not, you don’t want to end up paying for these costs on your own should something unfortunate happen. Do you need rental car insurance or do your credit card, car insurance, and travel insurance all provide some kind of coverage for the vehicle that you are renting?
Here’s what’s important: You must have insurance when renting a car in Canada. You’ll need to know how any existing insurance you already have covers a car rental and whether you need the insurance the car rental agency can provide or not.
Western Financial Group, a 100% Canadian company, can help you navigate your car, home, business, and boat insurance during this period of economic uncertainty.
Does my car insurance cover a rental car?
There’s no quick answer here. It will depend on your car insurance policy.
Typically, your car insurance will extend to a rental car in Canada or the United States if you have purchased additional liability coverage for damage to vehicles you don't own. This coverage is referred to as Legal Liability for Damage to Non-Owned Automobiles and it’s usually available as an add-on to your car insurance policy. You can check with your insurance provider about this coverage.
Does third-party liability insurance as part of my car insurance cover a rental?
Again, there’s no easy answer. It depends on the specifics of your car insurance policy. Third-party liability on your car insurance may cover rental cars in Canada and the U.S., but again, you need to check your policy. This coverage protects against damages or injuries caused to third parties during the rental period.
Read your car insurance policy and ask your car insurance expert about any questions you may have about third-party liability coverage extending to a rental car.
Here’s what you need to know about car rentals and third-party liability insurance in Canada: All rental cars must include a minimum level of third-party liability insurance by law. The minimum coverage is usually $200,000, except in Quebec, where it is $50,000. Higher limits of $1 million to $2 million are often recommended to make sure you are adequately protected in case of an accident.
Does my credit card cover a rental car?
Credit cards often provide rental car insurance, but the coverage can come with limitations. Make sure you know how your credit card covers a rental car and that you are comfortable with the level of financial protection it provides.
Credit cards may exclude third-party liability protection. To make sure you are adequately protected, consider buying supplementary liability insurance from the car rental agency, or increasing your car insurance policy limits before renting a vehicle.
Credit card rental insurance usually covers physical damage to or theft of the rental car. It includes towing costs and loss-of-use charges (compensating the rental company while the car is being repaired). Note that typically you need to decline the rental agency's Collision Damage Waiver (CDW)/Loss Damage Waiver (LDW) for your credit card coverage to apply. Always check your credit card's terms and conditions because they usually vary between providers.
What does car rental insurance include?
Third-party liability insurance
Legally, all rental cars in Canada come with a minimum level of third-party liability insurance to cover damages or injuries caused to others in an accident. Coverage amounts vary by province/territory depending on the rental company and location. Check the details of your rental car’s third-party liability coverage.
Optional car rental insurance
Car rental companies usually offer these coverages for greater protection:
- Collision damage waiver (CDW): Protects you from financial responsibility for damage or theft of the rental car.
- Supplemental liability insurance (SLI): Increases third-party liability coverage beyond the required minimum. Provides higher protection limits.
- Personal Accident Insurance (PAI): Covers medical expenses for you and your passengers in case of an accident.
- Personal Effects Coverage (PEC): Protects against loss, theft, or damage to personal belongings inside the rental car.
What’s the minimum car rental insurance I need in Canada?
The minimum car rental insurance you need is third-party liability insurance, which is legally required. It typically covers damages or injuries you cause to other people or their property while driving the rental car.
How does car rental insurance cover theft of the vehicle?
LDW (loss waiver damage) combines CDW (collision damage waiver) with theft protection, covering the cost of replacing the rental car if it is stolen during your rental period. Remember that these coverages are optional.
How does car rental insurance cover damage to the vehicle?
Car rental insurance typically covers damage to the vehicle through Collision damage waiver (CDW) or loss damage waiver (LDW) which are optional, as well as any coverage provided by your personal auto insurance or credit card.
How does car rental insurance cover third-party injuries?
Third-party injuries are covered by car rental insurance with mandatory third-party liability coverage and enhanced with the optional supplemental liability insurance (SLI).
Note that: Third-party liability insurance when renting a car does not cover injuries to you or your passengers. You will need to purchase the optional personal accident insurance (PAI), which covers medical expenses for you and your passengers in case of an accident.
How old do I need to be to rent a car?
Most provinces require you to be at least 21 to rent a car.
In Canada, if you are under 25 the types of vehicles you can rent are usually limited due to insurance and company policies. Car renters under 25 typically can’t rent the following types of vehicles due to higher insurance risks:
- Luxury cars
- Specialty vehicles
- Minivans and trucks
- Sports cars or high-performance vehicles
Renters under 25 are usually subject to a young renter fee, which varies by car rental company.
Final thoughts
Do your research and get the level of car rental insurance that you are comfortable with for your trip.
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